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Arie Goren, Portfolio123 (474 clicks)
Long only, value, research analyst, dividend investing
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Many small-cap companies are paying dividends. As a matter of fact, 283 companies among the 600 companies which are included in the S&P SmallCap 600 index are paying dividends, 146 of them have a dividend yield greater than 2% and 37 companies have a yield over 4%.

In my previous posts (here and here), I have tried to find out if the five stocks which have the highest dividend yield among the large-cap stocks which are included in the S&P 500 index, and the five stocks which have the highest dividend yield among the mid-cap stocks which are included in the S&P MidCap 400, are at a bargain now. In this article, I have tried to find out if the five stocks which have the highest dividend yield among the small-cap stocks which are included in the S&P SmallCap 600 index are at a bargain now.

While there is no official breakdown, the division between the large, medium and small cap is approximately as follows:

Large-cap: $10 billion and greater

Mid-cap: $1 billion-$10 billion

Small-cap: $100 million-$1 billion

S&P SmallCap 600

Description from Standard & Poor's:

The S&P SmallCap 600 covers approximately 3% of the domestic equities market. Measuring the small cap segment of the market that is typically renowned for poor trading liquidity and financial instability, the index is designed to be an efficient portfolio of companies that meet specific inclusion criteria to ensure that they are investable and financially viable.

In this article, I will give the corresponding fundamental parameters for these five companies and my own opinion about them. Nonetheless, these data and my opinion should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com on January 11, after the market close.

The table and the chart below present the top five highest dividend yielders, their forward annual dividend rate, the forward yield, the payout ratio and the dividend rate of growth for the past five years.

Company

Ticker

Price

Forward Annual Dividend Rate

Forward Annual Dividend Yield

Payout Ratio

Dividend Growth Past 5 Years

NTELOS Holdings Corp.

NTLS

12.96

1.68

12.96%

160.0%

0.0%

Prospect Capital Corporation

PSEC

11.24

1.32

11.74%

75.4%

-3.5%

Nutrisystem, Inc.

NTRI

8.96

0.70

7.81%

2,333.3%

0.0%

Government Properties Income

GOV

24.68

1.72

6.97%

162.3%

-4.9%

EPR Properties

EPR

46.01

3.00

6.52%

129.3%

-0.3%


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NTELOS Holdings Corp. (NTLS)

NTELOS Holdings Corp., through its subsidiaries, provides wireless communications services to consumers and businesses primarily in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio, and Kentucky.

NTELOS Holdings has a very low trailing P/E of 12.34 and even a lower forward P/E of 9.74. The forward annual dividend yield is very high at 12.96% and the payout ratio is at 160% and there has not been any dividend growth over the past five years.

NTLS has a total cash per share of $3.09 and it is expected to post a profit of $1.14 a share in the current year and $1.32 in 2013, which should be enough to sustain dividend payments of $1.68.

The NTLS stock is trading 42.95% below its 52-week high, and has 46.6% upside potential based on the consensus mean target price of $19.00.

The cheap valuation, the very rich dividend and the 46.6% upside potential based on the consensus mean target price of $19.00 -- make NTLS stock quite attractive.

(click to enlarge)

Data: Yahoo Finance

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Chart: finviz.com

Prospect Capital Corporation (PSEC)

Prospect Capital Corporation is a business development company. It is a private equity firm specializing in late venture, middle market, mature, mezzanine finance, buyouts, recapitalizations, acquisitions, growth capital, development, cash flow term loans, and bridge transactions.

Prospect Capital Corporation has a very low trailing P/E of 6.42 and a very low forward P/E of 8.99. The forward annual dividend yield is very high at 11.74% and the annual rate of dividend growth over the past five years was negative at -3.5% and the payout ratio is at 75.4%.

PSEC has a total cash per share of only $0.01 and it is expected to post a profit of $1.49 a share in the current year and $1.27 in the next year, which should be hardly enough to sustain dividend payments of $1.32.

The PSEC stock is trading 3.14% above its 20-day simple moving average, 5.52% above its 50-day simple moving average and 4.95% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

The cheap valuation metrics, the very rich dividend and the fact that the stock is in an uptrend are all factors that make PSEC stock quite attractive.

Data: Yahoo Finance

(click to enlarge)

Chart: finviz.com

Nutrisystem, Inc. (NTRI)

Nutrisystem, Inc. provides weight management products and services in the United States. The company offers nutritionally balanced weight loss programs designed for women, men, and seniors.

Nutrisystem has a forward P/E of 25.60 and the price to sales ratio is very low at 0.64. The forward annual dividend yield is very high at 7.81% and there has not been any dividend growth over the past five years.

NTRI has a total cash per share of $2.49 and it is expected to post a profit of $0.19 a share in the current year and $0.37 in 2013. Since the company has a low debt of only $30 million, it can use its cash to sustain the dividend payments of $0.70.

The NTRI stock is trading 33.64% below its 52-week high, and has 34% upside potential based on the consensus mean target price of $12.00. Analysts recommend the stock; among the four analysts covering the stock, three rate it as a strong buy.

The very rich dividend, the strong analysts' recommendation and the 34% upside potential based on the consensus mean target price of $12.00 are all factors that make NTRI stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Government Properties Income Trust (GOV)

Government Properties Income Trust is an office real estate investment trust, or REIT. As of September 30, 2012, we owned approximately $1.7 billion of office properties with approximately 10 million square feet located in 31 states and Washington, D.C.

Government Properties Income has a trailing P/E of 23.28 and a forward P/E of 23.07. The forward annual dividend yield is quite high at 6.97% and the payout ratio is at 162.3% and the annual rate of dividend growth over the past five years was negative at -4.9%

GOV has a total cash per share of $0.06 and it is expected to post a profit of $2.12 a share in the current year and $2.14 in the next year, which should be enough to sustain dividend payments of $1.72.

The GOV stock is trading 3.81% above its 20-day simple moving average, 6.47% above its 50-day simple moving average and 10.30% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

The rich dividend and the fact that the stock is in an uptrend are all factors that make GOV stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

EPR Properties (EPR)

EPR Properties, a real estate investment trust [REIT], develops, owns, leases, and finances entertainment and related properties in the United States and Canada.

EPR Properties has a trailing P/E of 19.83 and a forward P/E of 16.85. The forward annual dividend yield is quite high at 6.52% and the annual rate of dividend growth over the past five years was negative at -0.3% and the payout ratio is at 129.3%.

EPR has a total cash per share of $0.53 and it is expected to post a profit of $3.65 a share in the current year and $3.87 in 2013, which should be enough to sustain dividend payments of $3.00. But the company also has a huge debt of $1.34 billion, and it might decide to decrease the dividend rate in order to decrease its debt.

The EPR stock is trading 0.85% above its 20-day simple moving average, 3.17% above its 50-day simple moving average and 6.23% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

The rich dividend and the fact that the stock is in an uptrend are all factors that make EPR stock quite attractive.

(click to enlarge)

Data: Yahoo Finance

(click to enlarge)

Chart: finviz.com

Source: 5 Small-Cap Top Dividend Yielders: Are They Bargain Stocks Now?